Consumer Demand and Sustainability Requirements Are Key Factors
A convergence of cost savings, sustainability goals and regulations makes now the time for fleets to electrify.
According to a study from UPS and GreenBiz, sustainability goals and a lower cost of ownership are the leading reasons for large organizations to go electric. Many companies have established sustainability goals, and fleet electrification offers a measurable way to help meet them. Electric vehicles also unlock reduced operating costs that become even more essential as fleets grow.
Large fleets can be expensive to fuel and maintain. Electric vehicles offer significant advantages when it comes to fueling and maintenance costs.
Electricity is less expensive and offers more predictable pricing than fossil fuel. It also allows fleets to optimize charging activity for the most efficient and least expensive use of energy, including renewable sources. EVs are much more efficient than combustion engine vehicles as well, getting more out of the fuel they use.
Due to fewer moving parts, EVs require significantly less maintenance: no oil changes and almost no part replacements. This not only cuts costs, but also allows EVs to spend more time working and less time under repair orders in the workshop.
Transportation is a leading source of greenhouse gas emissions, and medium- and heavy-duty vehicles generate a disproportionate share of these emissions. Electrification allows any fleet to reduce emissions in a measurable, scalable way.
A growing number of organizations have established ambitious sustainability goals that are driving new business choices. The increasing availability of electric vehicles for all kinds of fleets enables organizations to meet sustainability goals through electrification.
Consumers increasingly expect fast delivery and sustainability: 80% of shoppers want same-day shipping (Temando) and 81% of consumers feel strongly that companies should help to improve the environment (Nielsen). Electrification offers companies the opportunity to combine sustainability with efficiency and cost savings.
The global coronavirus pandemic has shifted shopping habits, with weekly online purchases growing nearly 30 percent. Even when the pandemic fades, consumers may remain entrenched in new habits and continue to make online purchases that must be delivered quickly.
Last mile or last meter delivery is well suited to electric vehicles, which recover range through regenerative braking and are more efficient for city driving than gas or diesel vehicles.
Health is an underrecognized factor driving the need for electrification. Greenhouse gas emissions can exacerbate respiratory conditions like asthma, endangering the health of individuals and increasing healthcare costs for society as a whole.
US$72B (60,8B€)
Climate Benefits
US$113B (95,5B€)
Source: American Lung Association
American Lung Association research finds that EVs can help save thousands of lives while delivering US$72 billion (60,8B€) in health benefits and US$113 billion (95,5B€) in climate benefits. The opportunity to contribute to community benefits may be particularly important to many municipal fleets.
Around the world, local and national governments are mandating electrification for sustainability reasons.
Cities, countries and regions around the world have established ambitious goals for electrifying all types of fleets. The breadth of these goals will likely affect every fleet at some point.
Many electrification requirements are accompanied by attractive financial incentives that help accelerate the transition to an EV fleet. Here are just some of the incentives and commitments driving fleet electrification.
Car and van manufacturers selling in Europe must sell at least 15% zero- or low-emission vehicles by 2025 and 37.5% zero- or low-emission cars and 31% vans by 2030.
The EU Clean Vehicles Directive defines “clean vehicles” and sets national targets for public procurement. Member states aim to deploy up to 15% clean trucks and 66% clean buses by 2030.
The European Energy Performance of Buildings Directive requires existing non-residential buildings with 20+ parking spots to have at least one charging spot by the end of 2024. This requirement will be reviewed in 2021 in light of stricter CO2 targets.
In the UK, the Office for Low Emission Vehicles (OLEV) provides grants. Germany will begin a €500 million grant program for workplace and fleet in the first half of 2021. France aims to roll out 100,000 public charging stations by the end of 2021 by providing up to €9,000 in subsidies through ADVENIR.
Many European countries are eliminating sales of new internal combustion engine (ICE) vehicles. Norway's ban starts in 2025, followed by Sweden, Denmark, Ireland, the Netherlands and the UK in 2030.
France and Spain plan to eliminate new ICE vehicle sales in 2040.
EVs already outsell diesel in Norway thanks in part to financial incentives such as no road or purchase/import taxes for EVs, reduced ferry and parking fees, bus lane access, lower company car taxes and more.
If Germany moves its date from 2050 to 2035, affected sales from 2030-2040 will add up to more than 9 million vehicles in an area where roughly 250 million people live.
Several European utilities have made major commitments to electrification. The UK Electric Fleets Coalition has called for 100% EV sales by 2030 and includes many utility members. Several European utilities are also members of the Climate Group EV100 agreement, most notably those highlighted at right.
Canada has made a variety of commitments to electrification at the city and province level. The federal iZEV program allows businesses to choose between a financial incentive for purchasing up to 10 eligible light-duty vehicles or a tax write-off covering light-, medium- or heavy-duty vehicles.
The Canadian government, along with provincial governments in British Columbia and Quebec, and the City of Vancouver have all signed the Drive to Zero commercial vehicle pledge.
British Columbia, Edmonton, Toronto, Montreal and Laval transit agencies have committed to stop purchasing diesel buses between 2020 and 2025.
Major commitments to electrification among cities, states and regions will drive growth in electric fleets in the U.S. over the next decade and beyond. States and utilities are offering billions of dollars in funding to incentivize fleet electrification. A 30% federal tax credit for installing EV charging infrastructure was recently extended through 2021.
Climate Mayors EV Purchasing Collaborative
Nearly 200 collaborative members have committed to purchase more than 3,500 EVs by the end of 2021, avoiding nearly 28 million tons of CO2 emissions and 1.7 million gallons of gas per year and investing US$123.5 million (104,3M€) in EVs.
Multi-State Medium- and Heavy-Duty ZEV MOU
The Multi-State Medium- and Heavy-Duty ZEV MOU has 16 signatories aiming to make at least 30% of all new medium- and heavy-duty vehicle sales zero-emission vehicles by 2030.
Signatories (pictured below) include California, Colorado, Connecticut, Washington DC, Hawaii, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.
Electrification Commitments from Cities and Counties
Several regions have agreed to fully or mostly electrify their fleets, paving the way for their experiences to inform other heavy-duty fleets:
California Commitments
California has been setting the pace for all-electric fleets for years. Beyond leading the way for the multi-state medium- and heavy-duty ZEV MOU already mentioned, here are some notable commitments the state has made toward promoting electric fleet vehicles for various uses.
The California Clean Miles Standard creates new requirements to help curb emissions among transportation network companies (TNCs) as new forms of mobility continue to emerge.
The Advanced Clean Trucks (ACT) Rule is California's Clean Truck Standard and creates fleet reporting standards and requires zero-emission truck sales to rise to 55% of Class 2b–3 truck sales, 75% of Class 4–8 straight truck sales, and 40% of truck tractor sales by 2035. By 2045, every new truck sold in California will be zero-emission.
By 2045, every new truck sold in California will be zero-emission.
Governor Gavin Newsom has also announced that California will sell only zero-emission new light-duty and off-road equipment by 2035, and zero-emission new medium- and heavy-duty vehicles by 2045.
The California Department of General Services will purchase only zero-emission vehicles for its fleet, and only purchase from manufacturers that have committed to California's clean fuel requirements.
EVs are an important area of focus for utilities due to the increased demand for energy they will generate. Utilities can both make their own fleets run on electricity and support fleet electrification more broadly by building out charging infrastructure and offering incentives for businesses that want to electrify.
American Electric Power (AEP) will replace 100% of 2,300 cars and light-duty trucks with electrics by 2030, leading to a 40% electric fleet in under 10 years. AEP serves Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia.
In North Carolina, Duke Energy announced it will electrify 100% of its nearly 4,000 light-duty fleet vehicles and convert 50% of its roughly 6,000 medium- and heavy-duty and off-road vehicles to electric and other zero-emission vehicles by 2030. The planned fleet electrification targets will reduce carbon emissions and petroleum usage by 60,000 metric tons/year and 10 million gallons/year by 2030, respectively.
Xcel Energy aims to transition 20% of vehicles in its service area (Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin) to electric by 2030.
FirstEnergy (serving northern Ohio, most of Pennsylvania, northern New Jersey, eastern West Virginia and western Maryland) expects to electrify 30% of its approximately 3,400 light duty and aerial fleet vehicles by 2030, representing 1,034 vehicles, with the goal of reaching 100% electrification by 2050.
Georgia Power plans to electrify portions of its own public fleet as part of a Southern Company initiative to convert half of company fleet vehicles, including auto, forklift and ATVs, to electric by 2030.
Portland General Electric (PGE) in Oregon has committed to go 60% electric by 2030, including going 100% electric for Class 1 vehicles by 2025.
In August 2020, the California Public Utilities Commission approved the nation’s largest utility program for charging infrastructure: $437 million for Southern California Edison to fund 40,000 chargers. Half of the investment is for low-income communities and 30% is dedicated to multi-family residences. The program demonstrates the leadership of utilities in bringing charging to underserved communities.
